Retail Banking - Building a Growth Machine. By Aris Bogdaneris Board Member RI Group. The Current Environment. Slide 1. Slide 2

Transcription

1 Retail Banking Building a Growth Machine By Aris Bogdaneris Board Member RI Group Slide 1 Capital Markets Day, September 2008 The Current Environment Slide 2 Capital Markets Day, September 2008 Investor Handbook Retail Banking - Building a Growth Machine Page 41

2 Retail Banking Environment - Headwinds Deposit Gathering Credit Restrictions Rising Household Debt Customer and Network Saturation Households Debt to Income % Population per Branch 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% ,000 10,000 8,000 6,000 4,000 2,000 0 Bulgaria Czech Hungary Poland Romania Slovakia Russia Ukraine Austria Germany Switzerland Netherlands Belgium Finland Sweden Denmark Italy Spain Portugal Ireland Turkey Russia Hungary Czech Slovakia Poland Croatia Serbia Kososvo B&H Romania Source: ECB Statistics, EIU Source: McKinsey & Co., based on 2006 country data Capital Markets Day, September 2008 Slide 3 Retail Banking Environment - Tailwinds Demand Fueled Consumption Mortgage Boom Wealth Creation Russia and Ukraine Growth Retail Loan Growth (CAGR -) Mortgage Loans/GDP 140% 120% 100% 18% 16% 14% Eurozone (): 38.7% 14.2% 80% 12% 60% 10% 8% 8.0% 40% 6% 20% 0% Bulgaria Czech Estonia Hungary Poland Romania Slovenia Slovakia Lithuania Latvia Russia Ukraine 4% 2% 0% 1.8% 2.8% 1.0% e CE SEE CIS Source: ECB Statistics, EIU Source: Raiffeisen Research Capital Markets Day, September 2008 Slide 4 Investor Handbook Retail Banking - Building a Growth Machine Page 42

3 Retail Banking Environment - Tailwinds Russian Retail Banking Growth Potential After tax profit, USD billion 11.0 CAGR 24% Potential $7 bn Incremental Profit by 2012 Consumer finance Mortgages 19% 38% 3.7 Payments (incl. C/As) 22% Deposit (Non-C/A) Investments Insurance and pension distribution N/A 59% 17% 2012 Source: Global Banking Pools by McKinsey 2008 C/A = Current Accounts. Capital Markets Day, September 2008 Slide 5 Our Approach to Retail Banking Capital Markets Day, September 2008 Slide 6 Investor Handbook Retail Banking - Building a Growth Machine Page 43

4 Introduction Retail Banking Strengths - Brand Image & Awareness (1) - Branch Network Coverage - Operating Model - Geographic Diversification - Balanced Business Portfolio (Mass Affluent, Small & Micro Enterprises) Customers & Infrastructure Customer Base 13.4 mn Mass Affluent Customers 744,000 Micro Companies 99,000 Small Enterprises Core Distribution 3,077 Branches 71 Mortgage Centers Alternative Distribution 1,738 Auto Dealers 1,923 Retailers Sales Infrastructure 8,100 Personal Sales Advisors 450 Mortgage Sales Specialists 1,230 Exclusive Mobile Bankers 2,900 Small Business Advisors (1) Prompted brand awareness of 65% in CZ, 75% in SK, 77% in RS, 86% in UA, 89% in HU, 90% in HR, 97% in BH, 99% in RO Capital Markets Day, September 2008 Slide 7 An Effective HQ Operating Model in Place Head of Retail Controls country performance reviews and prioritizes activities of central team Support countries in product development & marketing strategies Retail Banking Topic Specialists Initiate projects according to country needs and HQ strategies Dedicated team for each country with product specialists Products & marketing Insurance & Funds Sales and distribution Branch service Risk management P&L Leadership Optimizes value proposition Mass Affluent SME Fully standardized quarterly performance reviews (ca. 20 pgs) Monthly Assessments to decide where to deploy specialists On-Site Project Management Capital Markets Day, September 2008 Slide 8 Investor Handbook Retail Banking - Building a Growth Machine Page 44

5 Differentiated Strategies to Optimize Franchise High Market Share Increase Potential Low Segmentation & CRM Fee Expansion Alternative Distribution SME Excellence Service Excellence Brand Building Network Development Build Risk Capabilities Launch New Products Niche Strategy Hungary Slovenia Czech Republic Bosnia Croatia Kosovo Poland Albania Bulgaria Romania Slovakia 6% 8% 10% > 12% Serbia Russia Belarus Ukraine Expand Distribution Product Proliferation Product Packaging Build Loan Engine Invest in IT Centralize Processes Average Nominal GDP Growth Rate 2010E (p.a.) Capital Markets Day, September 2008 Slide 9 Currently Focused on 7 High Impact Initiatives Completed Select Right Topics Standardize Approach Prioritized Rollout Build Local Capabilities In Progress Sales Force Effectiveness Albania Bulgaria Bosnia Belarus Czech Croatia Hungary Kosovo Poland Romania Russia Serbia Slovakia Slovenia Ukraine Pricing Optimization OTC Insurance Launch Affluent Banking Micro Banking Branch Service Excellence Mobile Sales Capital Markets Day, September 2008 Slide 10 Investor Handbook Retail Banking - Building a Growth Machine Page 45

6 Results Capital Markets Day, September 2008 Slide 11 Distribution Branch Network Becoming More Productive Number of branches Branch Sales Effectiveness Metrics 2,848 3,015 3,077 Volume/customer 2,443 Volume (1) /branch 000s 3,371 30/06/2008 3,041 2,557 2, ,305 13,115 10,390 30/06/2008 8, Customers/branch 4,541 4,312 4,063 3, /06/ % Increase In 30 Months 30/06/ (1) Volume represents average assets and liabilities Capital Markets Day, September 2008 Slide 12 Investor Handbook Retail Banking - Building a Growth Machine Page 46

7 Retail Customers Organic Customer Growth Sustained Quarterly Quarterly Net Customer Growth (000 s) 13.6 mn 12.1 mn 14.3 mn 9.7 mn 5.0 mn ,594 (1) 1,094 (2) /06/2008 Q1 Q2 Q3 Q4 Q Q Q Q Q1 Q2 Q3 Q4 Q Q (1) Acquisition of Bank Aval. (2) Acquisition of Impexbank. Capital Markets Day, September 2008 Slide 13 Business Volumes Volumes (1) Aggregated figures, RI Network banks, Retail total ( bn) Loan Portfolio Mix (Private Individual Only) CAGR 42% : 8.1 bn 33% 48% 16% 30/06/2008: 16.9 bn 5% 11% 27% 57% 3% /06/2008 Mortgage Personal Loans Credit Cards Auto Loans (1) Volume represents year-end average assets and liabilities Capital Markets Day, September 2008 Slide 14 Investor Handbook Retail Banking - Building a Growth Machine Page 47

8 Revenue Growth Is Broad Based Geographically Revenues (1) Consolidated figures, RI Retail total ( bn) 0.6 CAGR 55% Hungary Czech R. Slovakia Romania Bulgaria Kosovo Y-o-Y Revenue Growth 2006 Growth Key > 40% p.a % p.a. <20% p.a. Serbia /2008 Ukraine Russia (1) Net Interest Income + Commission Income Capital Markets Day, September 2008 Slide 15 Market Share Gains Primarily Driving Profits Pre-tax Profit Consolidated figures, RI Retail total ( mn) 487 Market Share Gains in 10 Markets PI Loan Market Share % 2004 Trend C-I ROE / % 78.6% 72.3% 68.3% 66.4% 11.1% 15.1% 24.8% 29.5% 28.1% CAGR 127% 288 Albania Belarus Bosnia Bulgaria Czech R Croatia Hungary Kosovo Poland Russia Romania Serbia Slovakia Slovenia Ukraine Capital Markets Day, September 2008 Slide 16 Investor Handbook Retail Banking - Building a Growth Machine Page 48

9 Opportunities Micro Banking Affluent Banking Insurance Capital Markets Day, September 2008 Slide 17 The Micro Business Opportunity Micro Companies Dominate EU 27 Total Number Of Enterprises (1) 19,650,000 Large Companies 40,000 Medium Companies 210,000 Small Companies 1,350,000 Micro Companies 18,050,000 Medium Term Objectives Margins in Micro Are Highest Among RI Retail Sub-Segments (2) Asset Margin % Liability Margin % Mass Affluent Small Micro Enterprises RI Customer Base: 13.4 mn 99, ,000 Staff and Train 1,000 Micro Relationship Managers Capture Personal Wealth of Owners (target between 10-30%) Develop Current Account Packages with e-banking Capability Leverage Mass Skills from PI Segment to Optimize Risk & Operations Processes Reduce Cost-Income from Low 60s% to Low 50s% (1) Source: Eurostat (SBS size class). Micro enterprises (1-9 persons employed), Small enterprises (10-49 persons employed), medium-sized enterprises ( people employed). (2) Based on year-end figures Capital Markets Day, September 2008 Slide Investor Handbook Retail Banking - Building a Growth Machine Page 49

10 The Affluent Banking Opportunity Small Number of Affluent and High Net Worth Individuals Drive Volumes in EU5 (1) RI Is Well Positioned To Compete HNWI/Private Banking Affluent e Mass 96.9 Percent of Customers Percent of Volume (2) Percent of Percent of Customers Volume(2) Affluent sub-brand in Raiffeisen Bank Serbia Well-known And Highly Recognized Foreign Brand 14.3 Million Customers Including 843,000 Small and Micro Enterprise Company Owners In-house And 3 rd Party Funds & Insurance Products Readily Available Extensive Branch Network In All Large Cities Where Affluent Customers Reside Strong CIS Presence Where Affluent Segment is Growing The Fastest Source; Mckinsey & Co. (1) EU 5 Ascension countries include Czech Republic, Poland, Hungary, Slovakia, and Slovenia; (2) Volume represents deposits, cash, mutual funds and securities. Capital Markets Day, September 2008 Slide 19 The Affluent Banking Opportunity First Class Private Banking: PFA s > 100,000 Economy Class Mass PI: Personal Financial Assets (PFA s (1)) < 20,000 Product driven Reactive execution of client needs Basic advice related to standard products Up-selling to related products Business Class Affluent Banking: PFA: 20, ,000 Dedicated RM, supported by product experts Priority service and troubleshooting Proactivity and advisory on specialized products Simple allocation of Financial Assets based on financial needs/risk profile Intensive care through lower RM/client ratio Covering all financial needs using a holistic/ lifecycle sales approach Dynamic planning and asset allocation Special products: tax optimization, family office (1) PFA= Personal Financial Assets represented by deposits, cash, mutual funds and securities. Capital Markets Day, September 2008 Slide 20 Investor Handbook Retail Banking - Building a Growth Machine Page 50

11 The Bancassurance Opportunity Bank Share in Life Insurance Sales, 2006 >80% 70-80% 60-70% 50-60% 40-50% 30-40% 20-30% 10-20% <10% Projected CEE Bancassurance Commissions (1) ( bn) +24% p.a. 4.8 High end + 20% p.a. 1.9 Lowend e 2017e Source: Axco; Swiss Re Sigma, BCG insurance database 1. Assumed commission NL/PPI 30%, Life 10% 2. Poland, Czech Republic, Slovakia, Hungary, Bosnia & Herzegovina, Croatia, Albania, Bulgaria, Romania, Serbia, Ukraine Source: Swiss Re Sigma; UNIQA, BCG Capital Markets Day, September 2008 Slide 21 The Bancassurance Opportunity 488 Premiums Per Bank Customer In Home Markets (1) ( p.a.) 294 (2) 288 (3) KBC Erste Raiffeisen Premiums Per Bank Customer in CEE 35 KBC 13 Erste 12 Raiffeisen International Insurance Commissions / Total Retail Revenues Bulgaria: 3.4% Poland: 2.9% Romania: 2.2% Slovenia: 1.5% Russia: 0.9% Ukraine: 0.8% Hungary: 0.8% Croatia: 0.8% Belarus: 0.8% Slovakia: 0.8% Czech R.: 0.7% Bosnia H: 0.6% Serbia: 0.4% Albania: 0.2% RI Total: 1.6% 2011 Target: 5% (1) Belgium and Austria, (2) Sparkasses Versicherung AG (3) Raiffeisen Versicherung incl. Finance Life Only. Note: Number of clients and total commissions based on market share (RB 25%, Erste 19%); Source: Annual Reports, Company Websites, BCG Analysis Capital Markets Day, September 2008 Slide 22 Investor Handbook Retail Banking - Building a Growth Machine Page 51